Those who follow the markets know that earnings reports – good or bad – tend to trigger big moves in a stock price only when they are surprises. No one knows this better than master showman Elon Musk, so in a way it was no surprise that the size of Tesla’s first-ever quarterly profit, announced after the closing bell on Wednesday, was a spectacular surprise (to TSLA holders, that is – to the many who were shorting the stock, it was a rude awakening).

The Silicon Valley standard-bearer announced a profit of $15 million for the quarter, or 12 cents per share. Most estimates on the Street were around 4 cents per share, and the stock, which had been accelerating for the past few weeks, leapt into overdrive – posting a daily gain of around 26% at this writing.

There’s black ink all over the balance sheet. Sales continue to grow, and the company has increased its target for 2013 deliveries from 20,000 to 21,000. Total revenues for Q1 rose 83%, and total gross margin rose from 8% to 17%, as the company succeeded in squeezing out costs. It has reduced the hours required to build a car by almost 40%, and saved some $30 million thanks to improved inventory management.

It’s not only Model S sales that are bringing in the cash. Tesla also earned $7 million supplying electric powertrains and battery packs to Toyota for its RAV4 EV, and components to Mercedes for its B-Class EV.

Another source of revenue is credits sold to other automakers under California’s Zero Emission Vehicle (ZEV) program, and this may be the only potential crack in the windshield. Tesla earned $68 million, or 12% of revenues, from the sale of the credits this quarter, but concedes that this probably won’t continue. “We expect this to decline significantly in future quarters, as ZEV credits will only apply to about 1/6 of worldwide deliveries, versus roughly half of US deliveries, and the price per credit has declined…we are reaffirming our prior guidance of a gross margin of 25% in Q4 2013, assuming zero ZEV credit revenue.”

Image: jurvetson (flickr)
Source: Tesla